chapter 16 Finance: Funding & Closing

A Servicing Transfer Statement is required if the loan servicer sells or assigns the servicing rights to a borrower's loan to another loan servicer. Generally, the loan servicer must notify the borrower how many days before the effective date of the loan transfer.

15

Betty purchased a bungalow. On Betty's closing statement for the purchase of the bungalow, which of the following would NOT be a Buyer's CREDIT?

Purchase price

Closing

Refers to the day on which the deed is stamped and recorded by the county recorder's office.

Title insurance

Protects the policyholder from losses due to a problem in the chain of title.

All of the following are categories of costs that typically are allocated in a real estate transaction, EXCEPT:

auto insurance.

All of the following people typically attend real estate closing meetings, EXCEPT the:

home inspector.

In order to complete the real estate transaction, closing costs must be paid. Closing costs appear:

on both of the seller's and buyer's closing statements.

Before the real estate purchase transaction can close, the buyer must complete all of the following, EXCEPT:

prepare the grant deed transferring title.

The lender may require a borrower to maintain an escrow account with the lender to ensure the payment of taxes, insurance, and other items. If the lender requires an escrow account, the Initial Escrow Statement is usually given at settlement or delivered within:

45 days after settlement.

Hazard insurance

A property insurance policy that protects both owner and lender against physical hazards to property such as fire and windstorm damage.

Escrow

A short-lived trust arrangement.

Escrow account

A trust account for funds set aside for future, recurring costs relating to a property, such as payment of property taxes and hazard insurance. Sometimes referred to as an impound account.

Allocation

Assigns a cost (generally one not yet spent) to either the seller or the buyer.

Closing statement

An accounting of funds made to the sellers and buyers individually.

Which statement summarizes all escrow account deposits and payments during the servicer's 12-month computation year?

Annual Escrow Statement

Which of the following is not a neutral party at a closing meeting?

Attorney

Jane is gathering documents that are needed for settlement. Because an existing loan is being paid off, Jane needs the:

Beneficiary Statement

The most frequently used settlement statement for 1-4 residential transactions is the:

Closing Disclosure.

Which of the following are interchangeable terms?

Closing and settlement

Which statement is INCORRECT regarding debits and credits?

Credits and debits are the same thing.

Closing costs

Expenses that buyers and sellers normally incur in the transfer of ownership of real property.

Proration

Divides a cost (most often one that has already been paid) between the buyer and the seller.

On the buyer's closing statement for the purchase of a property, which of the following would be a Buyer's DEBIT for Recurring Costs?

Impound account payments

Recording fees

Monies paid to government agencies, typically the county, to legally record documents that concern the property.

Transfer taxes

Monies paid to state or local governments to transfer the ownership of property from one owner to another

Servicing Transfer Statement

Required if the loan servicer sells or assigns the servicing rights to a borrower's loan to another loan servicer.

In states that "pass papers" or have closing meetings rather than closing escrow, who prepares the paperwork and closing documents?

Seller's attorney.

Closing Disclosure

Shows the actual settlement costs of the loan transaction. Also known as the HUD-1 Settlement Statement.

Debit

Shows the amount owed.

Annual Escrow Statement

Summarizes all escrow account deposits and payments during the servicer's 12-month computation year.

Escrow instructions

The written authorization to the escrow holder or title company to carry out the direction of the parties involved in the transaction.

The buyer and seller negotiate how the closing costs will be paid in the sale contract. Which statement is INCORRECT regarding a particular closing cost?

The closing cost may be ignored.

Property tax

The money owed to the local or state government for services used by the homeowner.

Credit

The reduction or elimination of an asset or expense. A credit is usually recorded on the right side of a column on a closing statement.

When title insurance is not issued, who attends the closing meeting to provide information about the property's chain of title and any liens against the property?

Title abstracter

Carl purchased a condo. On Carl's closing statement for the purchase of the condo, which of the following would NOT be a Buyer's DEBIT for Non-Recurring Costs?

Title insurance (owner's policy)

Recording fees are monies paid to government agencies, typically the county, to legally record documents that concern the property. Recording fees are often allocated to be paid by the:

buyer.

The document that shows how all closing costs, including prepaid and prorated expenses are allocated between the buyer and seller is called the:

closing statement.

The goal of the closing meeting is to:

do both (a) and (b).

The final meeting of the parties involved in the real estate transaction is called all of the following, EXCEPT:

reconciliation